IRS Announces Phase-Out of Paper Tax Refund Checks — What Taxpayers Need to KnowBig Change Starting September 30, 2025
The way Americans receive their federal tax refunds is about to change. Starting September 30, 2025, the IRS, under a new executive order, will no longer issue paper refund checks to individual taxpayers. Instead, refunds will be delivered exclusively through secure electronic methods such as direct deposit, prepaid debit cards, and digital wallets. This marks the beginning of a broader government-wide shift toward electronic payments for most federal disbursements, including Social Security and veterans’ benefits.
Why Is the IRS Moving to Electronic Refunds?
Security: Paper checks are over 16 times more likely to be lost, stolen, or altered than electronic transfers, leading to unnecessary delays and fraud risks.
Speed: Electronic payments give taxpayers access to their money faster. With direct deposit, refunds can arrive in less than 21 days after filing electronically, while mailed checks can take six weeks or longer.
Cost Savings: Processing paper checks is expensive — costing the government about 50 cents apiece versus less than 15 cents for an electronic transfer.
What Does This Mean for Taxpayers?
During the 2025 tax filing season, nearly 94% of taxpayers already used direct deposit for their refunds — but that still leaves millions who requested paper checks. Starting with tax returns filed for 2025 (received in 2026), all taxpayers will need to provide direct deposit information or use another electronic payment method to receive their refunds.
Exceptions and Alternative Options
There will be limited exceptions for taxpayers who do not have bank accounts or who would face undue hardship with electronic payments. The IRS is developing procedures to offer prepaid debit cards or digital wallets for those without traditional banking access. Guidance on requesting an exception will be published ahead of next year’s filing season.
How Should Taxpayers Prepare?
Make sure your banking information is up to date before you file your next return.
Explore options like opening a low-cost bank account, using a prepaid debit card, or setting up a digital wallet.
Look for IRS updates in early 2026 for specifics about exceptions and available alternatives.
Summary: Modernizing Refunds for All
This transition is designed to protect taxpayers, reduce government costs, and make refunds faster and safer. Millions of taxpayers will see no change in how they receive refunds, but those still relying on paper checks should prepare now to use convenient, secure electronic payment options.
Need help updating your banking information or preparing for the 2026 filing season? Contact us today to make sure you’re ready for the IRS changes.